Survey on International Trade in Banking Services:

Transcription

1 प र स प रक शन PRESS RELEASE स च र वभ ग, क द र य क य र लय, एस.ब.एस.म गर, म बई DEPARTMENT OF COMMUNICATION, Central Office, S.B.S.Marg, Mumbai फ न/Phone: फ क स/Fax: भ रत य रज़वर ब क RESERVE BANK OF INDIA 0व बस इट : Website : इ-म ल helpdoc@rbi.org.in Survey on International Trade in Banking : November 14, 2018 Today, the Reserve Bank released the results of the survey of international trade in banking services (ITBS), on its website. This annual survey covers information on core banking services (e.g., deposit, credit) and financial auxiliaries services rendered by banks with cross-border presence, based on explicit/implicit fees/commissions charged to customers (details of these services are given in the Annex). The survey provides responses on functioning of 186 overseas branches and 345 overseas subsidiaries of Indian banks as well as 286 branches of foreign banks operating in India. The number of employees posted in foreign locations by these banks are also reported. As all commercial banks with crossborder presence responded to the survey, these results reflect census position. Highlights: Indian banks recorded a marginal compositional shift in their overseas presence during with staff strength declining in their foreign branches but increasing in their foreign subsidiaries even as the number of foreign bank branches in India remained unchanged during the year. (Table 1) Indian banks overseas presence continued to be dominated by foreign branches, the consolidated balance sheet of which was ten times the size of that of their foreign subsidiaries. (Table 2) The level of credit and deposits of overseas branches of Indian banks declined during the year, resulting in some reduction in their consolidated balance sheet; in contrast, balance sheet expansion was recorded by their overseas subsidiaries and foreign banks in India. (Table 2) Foreign branches of Indian banks continued to focus on fund-based operations and the share of credit in their total assets (58 per cent) was higher than that of foreign banks branches in India (42 per cent). (Table 2) The income of overseas branches of Indian banks increased during the year whereas branches of foreign banks in India recorded decline in both interest and non-interest income. (Table 3) A substantial portion of the fee income of foreign banks operating in India continued to accrue from derivative, stocks, securities and forex trading services, followed by payment and money transmission services, whereas overseas branches of Indian banks generated a major share of fee income by rendering credit related services, derivative, stocks, securities, forex trading services and trade finance related services. (Table 4). Branches of Indian banks located in the UK generated the highest fee income, followed by their branches in the UAE, Singapore and Hong Kong (Table 5). Ajit Press Release : /1119 Prasad Assistant Adviser

2 2 Table 1: Employment Distribution Bank groups (end-march) Indian Banks Branches Operating Abroad Indian Banks' Subsidiaries Operating Abroad Foreign Banks Branches in India Total number of branches Total number of employees 3,984 3,911 4,704 5,039 24,766 24,358 of which: Local 2,520 2,444 4,194 4,527 Indians 1,417 1, }24,602 }24,183 s Notes: 1. Financial Year-end RBI Reference Rates are used for Rupee-US Dollar conversion. 2. Both provisional and revised Data (R) are presented for. Data for are provisional. 3. These notes are applicable for all tables. Table 2: Consolidated Balance Sheet Items Bank groups (end-march) Items Amount in ` billion Amount in US$ billion (R) (R) Indian Banks' Branches Operating Abroad Credit extended 8, , , Deposits mobilised 5, , , Total Assets/Liabilities 14, , , Indian Banks' Subsidiaries Operating Abroad Credit extended Deposits mobilised Total Assets/Liabilities 1, , , Foreign Banks Branches in India Credit extended 3, , , Deposits mobilised 4, , , Total Assets/Liabilities 8, , , Items Table 3: Consolidate Income and Expenditure: Bank groups Indian Banks Branches Operating Abroad (R) Indian Banks' Subsidiaries Operating Abroad (R) (Amount in ` billion) Foreign Banks Branches in India (R) Income (-4.6) (-4.5) (7.0) (1.0) (1.1) (17.0) (3.8) (3.8) (-5.6) Of which; Interest Income (-2.9) (-2.8) (8.3) (2.2) (2.4) (17.7) (-1.7) (-1.8) (-2.0) 2. Expenditure (8.0) (8.6) (17.5) (7.8) (7.9) (-1.2) (3.4) (3.6) (-3.0) Of which; Interest Expenses (1.3) (1.6) (18.7) (-2.3) (-2.3) (16.3) (-1.5) (-1.6) (-9.9) Note: Figures in the parentheses indicate annual growth for the item.

3 3 Table 4: Activity-wise Composition of Fee Income from Banking Bank groups Banking Service Deposit Account Management (DAM) Indian banks Branches Operating Abroad (Amount in ` billion) Foreign Banks' Branches Operating in India (R) (R) Credit Related (CRS) Financial Leasing (FLS) Trade Finance Related (TFR) Payment and Money Transmission (PMT) Fund Management (FMS) Financial Consultancy and Advisory (FCA) Underwriting (US) Clearing and Settlement (CSS) Derivative, Stock, Securities, Foreign Exchange trading (DER) Financial (OFS) Total Figures in the parentheses indicate annual growth for the item (7.7) (-4.8) (9.6) (13.0) (13.7) (4.5) Table 5: Country-wise and Activity-wise Banking Bank groups DAM CRS TFR PMT DER UK UAE Indian Banks Branches Operating Abroad Singapor Hong Bahrai USA e Kong n Japa n Sri Lanka (Amount in `billion) Countries (R) (R) (R) (R) (R) (R) Total

4 4 All (R) Indian banks' Subsidiaries Operating Abroad DAM CRS TFR PMT DER All UK Canada Russia UK Countries Total (R) (R) (R) (R) (R) (R) (R) DAM: Deposit Account Management CRS: Credit Related TFR: Trade Finance Related PMT: Payment & Money Transmission DER: Derivative, Stock, Securities, Foreign Exchange Trading services

5 Banking Covered in the Survey Banking services include, acceptance of deposits and lending (the core banking services), and the other financial services (para-banking services) like payment services, securities trading, asset management, financial advice, settlement and clearing service, etc. With the improvements in economic integration of financial markets and activities, the international trade in banking services has significantly increased. The GATS framework envisages that the delivery of any commercial services can be through four different modes viz., Mode 1 Cross Border Service, Mode 2 Consumption abroad, Mode 3 Commercial presence and Mode 4 movement of natural persons. In Mode 3, the bank has a commercial presence in the territory of the service importing country and the service is delivered therein. The commercial presence can be through various investment vehicles like representative offices, branches, subsidiaries, associates and correspondents. Banking services covered in this survey include financial auxiliary services such as (i) deposit account management services, (ii) credit related services, (iii) financial leasing services, (iv) trade finance related services, (v) payment and money transmission services, (vi) fund management services, (vii) financial consultancy and advisory services, (viii) underwriting services, (ix) clearing and settlement services, and (x) derivative, stock, securities and foreign exchange trading services. While carrying out the banking business, banks cater to the financial services needs of the residents of the country of operation as well as non-residents of that country. Keeping this in view, the survey also collected the information with bifurcation of financial services rendered to residents and non-residents separately. Covered: Deposit Account Management services include fees and commissions charged to or received from the deposit account holders, for maintaining deposit accounts such as fee for cheque book, fee for internet banking, commission on draft and other instrument provided, penalty for not maintaining minimum balance, etc. and any other fees charged to deposit account holders. Credit related services include fees received for credit-related or lending related services like credit processing fees, late payment or default charges and early redemption charges. Charges for facility and management fees, fees for renegotiating debt terms, mortgage fees, etc. also to be reported here. Financial Leasing services include fees or commission received for arranging or entering into financial lease contracts. This also includes fees received directly or deducted from the proceedings. Trade Finance related services include commission or fees charged for arranging trade finance like buyers' and suppliers' credit, fees for establishing/originating, maintaining or arranging standby letters of credit, letter of indemnity, lines of credit, fees for factoring services, bankers acceptance, issuing financial guaranty, commitment fees, handling charges for trade bills. Payment and Money Transmission services include fees or charges for electronic fund transfer services like SWIFT, TT, wire transfer, etc. ATM network

6 2, annual credit /debit card fees, Interchange charges, fees for point of services, etc. also have to be reported here. Further, charges on the customer for making remittances abroad or receiving remittances from abroad have to be reported here. Fund Management services include fee or income received for managing or administering financial portfolios, all forms of collective investment management, pension fund management, custodial, depository and trust services. Commission or fees for safe custody of shares/ equities, transaction fee for custodian account, communication cost or any other fees/charges related to custodian account should also be reported. Financial Consultancy and Advisory services include fees for advisory, intermediation and other auxiliary financial services including credit reference and analysis, portfolio research and advice, advice on mergers and acquisitions and on corporate restructuring and strategy. Arrangement/management fees for Private placement of share/equities are also to be included. Underwriting services include underwriting fees, earning from buying and reselling an entire or substantial portion of newly issued securities. Clearing and Settlement services include settlement and clearance services for financial assets, including securities, derivative products, and other negotiable instruments. Derivative, Stock, Securities, Foreign Exchange trading services include commissions, margin fees, etc. received for carrying out financial derivative transactions, placement services, and redemption fees. Earnings received on banks' own account as well as on behalf of customers for carrying out foreign exchange trading has to be reported under this item. Explicit brokerage fees and commissions for foreign exchange brokerage services are also to be reported. Earnings received on banks' own account for carrying out trading in derivative, stock, securities etc. should not be reported. A Technical Group on Statistics for International Trade in Banking (TG- SITBS) was set up by the Reserve Bank of India including members from Ministry of Finance, Ministry of Commerce and various departments (Department of Economic and Policy Research, Department of Banking Regulation and Department of Statistics and Information Management) of the Bank. The TG-SITBS, after examining the different data sources available in the Reserve Bank, recommended collection of activity-wise international trade in services through annual surveys and suggested that initially the data may be collected on banking services from foreign banks operating in India and Indian banks having operations abroad. The TG-SITBS also recommended that a suitable questionnaire with explanatory notes should be prepared/framed in consultation with the banks and suggested conducting annual survey for the financial year by June Accordingly, a survey schedule was prepared after detailed discussions with the major Indian banks with overseas presence and foreign banks operating in India.